Effects of audit committee characteristics on quality of financial reporting among firms listed in Nairobi Securities Exchange, Kenya

Abstract

The purpose of the study was to establish the effects of audit committee characteristics on quality of financial reporting among firms listed in Nairobi Securities Exchange, Kenya. The study was guided by the agency theory. Explanatory research design was used. A survey of all firms was done and only 46 firms were extracted because they were operating in NS E at the year 2014. This study utilized secondary data which was collected by use of a document analysis guide. Data collected was analyzed by using both descriptive and inferential statistical methods. The findings indicated that audit committee size has a positive and signifi cant effect on the quality of financial reporting (β1= 0.417, ρ<0.05). However, findi ngs showed that audit committee independence had a negative and significant effect on the quality of financi al reporting (β2= - 0.478, ρ<0.05). The findings indicated that increase in audit committee size increases quality of financial reporting. This implies that an increase in the audit com mittee siz e enables the members to distribute the workload and dedicate more time and resou rces in monitoring. These findings will also have policy implications as regulators around in Ken ya continue to define and refine the desired characteristics and behavior of audit committees . Therefore, the findings of this study will ensure future platforms changes regarding audit committees are adequately informed